Canada Inks "Cyclone" Deal With Sikorsky
Canadian officials signed two separate, related contracts with a unit of Sikorsky Aircraft Corp. to provide 28 versions of its H-92 for that nation's Maritime Helicopter Project as a key competitor's legal challenges to the move faltered.
The aircraft, to be designated CH-148 Cyclones, are intended to replace Canada's aging and failing fleet of Sea Kings.
Under the first contract, valued at $1.5 billion, Sikorsky International Operations, Inc. is to provide "28 fully integrated, certified and qualified helicopters with their mission systems installed" at a rate of one a month starting in November 2008, according to the Canadian government. The contract offers bonuses for early delivery. But the Sikorsky unit would face penalties of more than $80,000 a day, to a maximum of $36 million, if it misses deadlines.
The more lucrative contract is the second one. Valued at nearly $2.7 billion, it is a 20-year agreement for in-service support of the helicopters. It includes the construction of a training facility and a simulation and training suite.
The H-92 will give Canada's military personnel "a helicopter that can perform the diverse and difficult roles required in today's global security environment," said Defence Minister Bill Graham.
AgustaWestland, which had offered the EH101 for the maritime helicopter competition, challenged the July 2004 selection of the H-92 before Canada's Federal Court. Canada currently operates 18 EH101s as the CH-149 Cormorant maritime helicopter. It argued that the H-92's selection was ""biased, unfair and contrary to the rules of the procurement.'' The court directed the company to first file its complaint with the Canadian International Trade Tribunal. That body on Nov. 24, 2004 declined to investigate the matter, saying AgustaWestland filed its complaint to late. Under the tribunal's procedures, a complainant must file with 10 working days of learning the basis for its complaint. The tribunal noted that the Canadian government informed AgustaWestland on July 23, 2004, the date of the contract award, that its proposal did not comply with the procurement requirements. On Aug. 23, 2004, the tribunal said, the government gave AgustaWestland detailed information on its evaluation of the bids. Therefore, the tribunal ruled, the company should have filed its complaint by Sept. 7, 2004. AgustaWestland's lawyer in Canada, Gordon Cameron, said he would pursue the matter with the Federal Court.
After it signed the contracts with Canada, Sikorsky International Operations farmed out part of the in-service support work to a Canadian subsidiary of L-3 Communications. Under an agreement valued at more than $670 million, L-3 Communications MAS (Canada) Inc. will set up and provision the Cyclone support activities. It will be responsible for ensuring a smooth transition from production to in-service support, providing a training facility, as well as managing and controlling all support work in compliance with contract terms. L-3 MAS is a leading Canadian provider of aircraft fleet management, product life-cycle extension, support services and aircraft maintenance to government and commercial customers. It employs more than 800 people at centers in Mirabel and Bagotville in Quebec, in Fredericton, New Brunswick, in Ottawa, Ontario and in Cold Lake, Alberta.